BofA CEO: Struggling Americans feel they are in a recession

NEW YORK –

Bank of America’s CEO said The debate on whether the U.S. economy technically is in a recession is missing the point. The important thing is that the current economic conditions are negatively affecting those who are most at risk.

“Recession is a word. It doesn’t matter if we are in recession or not. It’s what it feels like for the people going through this,” Moynihan told The Associated Press during an interview at the Bank of America Tower near Bryant Park, where he talked about inflation and the current state of the economy, as well as the health of the U.S. consumer.

The question of whether the U.S. economic is in recession has become a political issue heading into the 2022 midterm election. While inflation has reached a new high, and U.S. consumer confidence has fallen, other measures of the economy like the monthly jobs report remain strong. The Federal Reserve has increased interest rates aggressively to combat high wholesale and consumer prices.

Moynihan, who has been BofA’s CEO since 2010, would not say the U.S. economy is in recession, saying that declaration will have to come from “a bunch of people in Cambridge, Massachusetts,” a reference the National Bureau of Economic Research, the non-partisan organization that determines when recessions begin and end.

However, Moynihan cited two major issues negatively impacting average Americans – gas prices and rent – as reasons to be concerned. The national average price for a gallon gasoline jumped to just over $5 in June and then fell back below $4 last Wednesday. Moynihan was more concerned about rising rents. These prices do not fluctuate like gasoline prices.

“Gas prices are coming back down, but rents are going up 10, 12, 15 per cent. And rent can end up taking 40% of these household’s income,” Moynihan said. Rent accounts for about one-third of the government’s Consumer Price Index, which showed a year-over-year increase of 8.5% in July.

The average U.S. consumer was in good financial health when they entered this period of high inflation. To extend unemployment benefits and other forms pandemic relief, the U.S. government spent trillions. Americans had higher savings levels and paid down their debts quicker than ever before. These economic programs were largely abandoned last year.